Earlier today I posted a video about PLTR stock (LINK). Over the last 6 months PLTR stock is down over 70% and investors are wondering:
I've posted about Palantir several times as their core products (i.e. Gotham, Apollo, Foundry) appear to have a strong value proposition and they're rapidly taking market share. For example, during 1Q 2022 their commercial business grew by 54%! The global enterprise software market is NOT growing 50%, so this suggests that Palantir is rapidly taking market share.
Not only is Palantir successfully selling into new customers, but their existing customers are spending more with them. During the 1Q 2022 their net dollar retention was 124%. This means that even if Palantir didn't sign up any NEW customers during the quarter, their EXISTING customer base drove 24% revenue growth!
If Palantir is so successful, why is their stock getting crushed?
My concern with Palantir, and why I haven't bought it yet, is because the VALUATION was always too expensive for me. I called this specific risk out several times and even at one point PLTR stock was trading over 50x sales!
While the weight of Palantir's over valuation hurt the stock price in recent months, the stock also declined 20%+ today partly in response to management's guidance of only 25% growth for the 2Q 2022. While most companies would love to have 25% growth, when you're valued as a "hyper-growth company" any slight deceleration can lead to a dramatic stock drop.
So is Palantir, or PLTR stock, a BUY NOW?
At this point, Palantir is still unprofitable, barely generates free cash flow, but has tremendous growth prospects. I'm going to continue tracking their developments as I think they they have the potential to massively outperform the major U.S. stock market indices in the years ahead.
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